Kerik Loan Activity Is Brought to Light After Indictment

Bernard B. Kerik fully repaid a $250,000 personal loan cited in his recent federal indictment days after city investigators began asking about it in 2005, according to people who have been briefed on the transaction.

Federal prosecutors have not alleged that anything about the loan itself was improper. But they charged in a 16-count indictment unsealed two weeks ago that Mr. Kerik had failed to disclose it to the federal government as required after the White House appointed him to train the Iraqi police in 2003.

The loan allegation was one of the few surprises in the indictment, which charged Mr. Kerik with tax evasion and fraud largely in connection with previously known financial transactions. In filing the charges, prosecutors with United States attorney’s office declined to identify a “wealthy Israeli industrialist” said to have financed the loan or to name the “Brooklyn businessman” said to have served as an intermediary in the transaction, referring to them only as John Doe No. 7 and John Doe No. 8.

But interviews with people who have been briefed on the transaction indicate that the industrialist was an Israeli billionaire and philanthropist, Eitan Wertheimer, whose family’s vast holdings include companies with United States Defense Department contracts. The Brooklyn businessman was Shimon Cohen, a marble and stone merchant who has been a friend of Mr. Kerik’s for several years.

Two years ago, though, Mr. Cohen was interviewed by city investigators and described the 2003 loan as an informal transaction. He said that in handing the money over, he had not discussed any interest with Mr. Kerik nor set any timetable for repayment, according to people briefed on his account of the loan and Mr. Cohen’s lawyer.

Nonetheless, on June 10, 2005, nine days after Mr. Cohen’s conversation with city investigators, Mr. Kerik paid back the loan in full, with interest.

Mr. Kerik’s lawyer, Kenneth M. Breen, of Paul, Hastings, Janofsky & Walker L.L.P., declined last week to answer questions about the loan or to explain why Mr. Kerik would have paid interest he might not have owed.

As spelled out in the indictment, Mr. Kerik has accepted financial help from several friends over the years. The loan to Mr. Kerik came in June 2003 when he was on leave from his job at Giuliani Partners, the consulting firm of former Mayor Rudolph W. Giuliani, and serving in Iraq as an adviser to the Interior Ministry for the Coalition Provisional Authority. In that post, which he held for three months, Mr. Kerik was assigned to train the Iraqi police.

At the time, his wife, Hala, was home preparing to renovate a house the couple had bought in Franklin Lakes, N.J. The $250,000 loan to Mr. Kerik was provided in a personal check written by Mr. Cohen to Mr. Kerik’s wife, according to Mr. Cohen’s lawyer, Mark M. Altschul, and the people briefed on the account Mr. Cohen provided to investigators. Mr. Altschul said there was no written agreement that outlined the terms of the loan.

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The indictment says that the money actually came from the wealthy industrialist, from whom Mr. Cohen had borrowed the funds. Prosecutors have not offered any explanation as to what might have brought about the transaction, or why Mr. Wertheimer did not provide the funds directly.

According to Mr. Cohen’s 2005 interview with city investigators, Mr. Cohen has known Mr. Kerik for several years, having been introduced by a friend in common, Nathan Berman, a real estate developer who has also lent Mr. Kerik money.

Mr. Wertheimer met Mr. Kerik through Mr. Cohen, a longtime friend, according to associates, and the two spent time together during Mr. Kerik’s trip to Israel in August 2001. Later that year, as he left his New York City police post, Mr. Kerik handed out 19 gold and blue enamel badges that declared the recipients “Honorary Police Commissioners,” and Mr. Wertheimer received one, as did Mr. Berman and Judith Regan, then Mr. Kerik’s lover and publisher. The real estate developer Steven C. Witkoff, who is listed in the indictment as John Doe No. 5, who paid more than $236,000 in rent for Mr. Kerik from 2001 to 2003, also received one of the badges.

In Israel, Mr. Wertheimer serves as chairman of Iscar Ltd., a privately held metal cutting tool business that is one of Israel’s largest companies and one that sold 80 percent of its stock last year to Warren Buffett’s Berkshire Hathaway. The indictment referred to him as an industrialist whose companies “did business with the federal government.”

Questions about the loan first arose in 2005 as part of an investigation being conducted by the Bronx district attorney’s office and New York City’s Department of Investigation. That inquiry ultimately led Mr. Kerik to plead guilty last year to two unrelated misdemeanor charges in state court. He admitted that he had failed to report having accepted renovations to his Bronx apartment that were paid for by a company seeking a city license and that he had failed to report a loan from Mr. Berman.

Investigators noticed the Cohen transaction in reviewing Mr. Kerik’s financial records, and Robert C. Joyce, a Department of Investigation assistant commissioner, asked about it during the June 1, 2005, interview with Mr. Cohen, according to Mr. Altschul and a person who has been briefed on the session.

Mr. Cohen acknowledged the loan in the interview but did not note during the conversation that he had, in turn, borrowed money from Mr. Wertheimer to cover it, according to the person who was briefed.

At the time, Mr. Kerik had not made any payments on the loan. But financially, he was in a much better place than he had been as a city official. In addition to his earnings as a member of Giuliani Partners, he had received more than $6 million through the sale of stock in Taser, a company on whose board of directors he served.

Nine days after Mr. Cohen’s interview, Mr. Kerik paid off the loan.

A spokeswoman for Giuliani Partners said that the company had not had any business relationship with any of Mr. Wertheimer’s companies during the time Mr. Kerik was affiliated with the business. Mr. Kerik left the consulting company directed by Mr. Giuliani in 2004, after his nomination to be the federal Homeland Security secretary was withdrawn.

Charles V. Bagli contributed reporting.

A version of this article appears in print on , on Page B1 of the New York edition with the headline: Kerik Loan Activity Is Brought to Light After Indictment. Order Reprints|Today's Paper|Subscribe